[lxf3768]

I came to USA in Aug. this year from China, and doing research work in a university. Because my status is J1 research scholar, so I think I am entitled tax exemption. But the tax officer in the school insisted that I could have only $5000 per year exempt from withholding of the tax from my wages. Is that true? Thank you.

[AtlantaTaxExpert]

The J-1 visa exemption for researchers and academics applies only if the research is for a non-profit organization. It is possible that your research is being sponsored by a private, for-profit corporation, which is why the tax officer insists that you are entitled ONLY to the standard $5,000 treaty exemption called for in the China-U.S. Tax Treaty.

Further, even if you ARE qualified for the total tax exemption, it is good for ONLY two years. If you stay beyond two years, you become liable for income taxes RETROACTIVE to the first day you arrived in the United States. That two-year, retroactive tax bill can be a HUGE burden, so the tax officer may be doing you a favor.

Make an appointment with the tax officer and ask him to show you the provision in the tax treaty that makes your income under the J-1 visa taxable. The treaty and the technical explanations are available at Internal Revenue Service.

Once he does this research, he may change his position.